Cover of Why Nations Fail by Daron Acemoglu, James A. Robinson - Business and Economics Book

From "Why Nations Fail"

Author: Daron Acemoglu, James A. Robinson
Publisher: Profile Books
Year: 2012
Category: Business & Economics

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Chapter 11: The Virtuous Circle
Key Insight 5 from this chapter

Checks on Power: The US Supreme Court vs. Argentina's Judiciary

Key Insight

Franklin D. Roosevelt, elected U.S. President in 1932 during the Great Depression, faced significant opposition to his New Deal policies from the Supreme Court, despite a strong popular mandate and Democratic majorities in Congress. Key legislation, such as the National Industrial Recovery Act, was unanimously ruled unconstitutional in 1935, with the Court asserting that 'Extraordinary conditions do not create or enlarge constitutional power.' Facing challenges to other critical acts like Social Security and National Labor Relations, and reelected with 61% of the popular vote in 1936, Roosevelt sought to counter the Court's resistance.

In 1937, Roosevelt proposed the Judiciary Reorganization Bill, suggesting compulsory retirement for judges at seventy and allowing him to appoint up to six new justices. He argued the Court was overworked and acting as a 'policymaking body,' not a judicial one. However, his 'court packing' plan met significant resistance. Public opinion was only 40% in favor, and even Justice Louis Brandeis, sympathetic to much of the New Deal, opposed the plan. Crucially, the Democratic-controlled Congress and Senate refused to pass the bill, with the Senate Judiciary Committee condemning it as a 'needless, futile and utterly dangerous abandonment of constitutional principle.' Roosevelt ultimately failed to remove the constraints imposed by the Supreme Court, illustrating the power of the virtuous circle where inclusive political institutions resist attempts to undermine their own continuation.

This episode contrasts sharply with events in Argentina, where similar struggles unfolded within a predominantly extractive institutional framework. In 1946, President Juan Domingo Perรณn, following his democratic election, successfully impeached three of the five Supreme Court justices and accepted the resignation of another, then appointed four new justices. This move, which was justified by charges including the Court's rulings against his labor legislation, allowed Perรณn to exercise unchecked power, effectively ruling as a dictator. The pattern continued: subsequent military and civilian regimes, and even democratically elected President Carlos Saรบl Menem in 1990, expanded and reshaped the Court to ensure majorities, demonstrating Argentina's 'vicious circle' where a lack of pluralism and broad support for judicial independence made the judiciary vulnerable to political manipulation, unlike the U.S. experience.

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